Stocks and Shares ISA: Timing the Coronavirus Pandemic?

Twointhebush

This could be cynical but it's the new tax year and I'm able to use my entire ISA allowance. Would the peak of the pandemic be a good time to invest in my stocks and shares ISA?

TCA

Not cynical at all. You're an investor. If by peak pandemic you mean bottom of the market (for whatever you're looking at buying), then that would be a great time to buy. Just let us know when that is and we'll all buy in as well!

Twointhebush

I would say that the peak would be just before the average daily toll starts dropping. Would this be the bottom of the market? I know you're not meant to try and time the market, but I'm guessing that it couldn't get much worse than this, and investing anytime soon would see the market start to climb as the pandemic dies down. However they do say, there could be a second wave starting in the autumn?

Alistair31

Twointhebush said:

I would say that the peak would be just before the average daily toll starts dropping. Would this be the bottom of the market? I know you're not meant to try and time the market, but I'm guessing that it couldn't get much worse than this, and investing anytime soon would see the market start to climb as the pandemic dies down. However they do say, there could be a second wave starting in the autumn?

Sounds like you’ve convinced yourself. 

Thrugelmir

Twointhebush said:

This could be cynical but it's the new tax year and I'm able to use my entire ISA allowance. Would the peak of the pandemic be a good time to invest in my stocks and shares ISA?

Peak in the UK or Globally? 

Malthusian

The market won't start to climb when the pandemic dies down. Traders may be guided by herd mentality but they aren't completely thick. They're well aware that eventually everyone who is going to die of coronavirus will already be dead.

The market will start to climb when the market accepts that the economy is picking up again after the end of the pandemic (and that governments aren't going to put their countries in lockdown again). When those made unemployed are getting new jobs, when those hoarding cash start to spend, when businesses start to invest. That will take a long time, which is why it always takes much longer for the market to recover than to crash. (E.g. 4 years from the bottom for the credit crunch and 6 years for the dot com crash.) Herds of humans are like oil tankers.

Investing during a crash is a good idea but it is not easy money. And it could easily get worse before it gets better. "It can't get any worse" is what people said when the markets had fallen 20%.

dunstonh

Would the peak of the pandemic be a good time to invest in my stocks and shares ISA?

You may have already missed the bottom of the market.   Or recent growth could be a dead cat bounce.

I would say that the peak would be just before the average daily toll starts dropping. 

In which country?  After all, this is a global issue and the whole world hasn't stopped.  And investing is global too.

. Would this be the bottom of the market? 

No.   The two things are not linked.  The markets already have an idea of what they think is going to happen.  The recovery will begin when there is positive news around the world.  That is already happening.   Good news can turn to bad news and its unexpected things that the market does not like.   And as such, you cannot time those.

. However they do say, there could be a second wave starting in the autumn? 

The virus is out. it is here to stay.   It will be another annual flu.   This is why there is a lot of interest in herd immunity.

Twointhebush

So essentially even with the markets down as they are, it would still be a gamble to invest a single (large-ish) sum today? 

wmb194

Why does it have to be all or nothing?

NorthernJoe

Twointhebush said:

Would the peak of the pandemic be a good time to invest in my stocks and shares ISA?

Your premise relies on an immediate bounce back as if nothing every happened. 

The peak of the pandemic will be apparent long before it happens. We have a wealth of data, projections, curves etc. If that's the main determinant of global stock prices, it will be priced in long before it happens (if it hasn't already). 

The situation is much more complex however. . . 

How/when will the current restrictions be relaxed? 
What about a second wave of infection? 
How will the current restrictions affect business beyond the acute phase? 
Can we avert a cash crunch if, contrary to popular belief, this lasts more than a few months? 
What will be the effect of multiple small/medium cap business failures? 
What impact with massive debt/borrowing levels mean for growth in the medium to long-term? 
Will certain sectors every recover? 

steampowered

Remember that markets look forward. Most investors try to invest on future expectations, not just current circumstances.

The markets have already recovered significantly. The FTSE100 sank to 4993 on 23 March. Today it sits at 5,616. An increase of 11%. 

Will the markets go back down to 4993, or will they continue recovering? Nobody knows. It's highly unlikely you'll be able to time the market so if you are investing for the long term, you might as well take the plunge and invest.